28 March 2012

Negative List of Service Tax, Section 66D

Negative List of Service Tax

Finance Bill 2012 has proposed a complete changes is scheme of levy of Service. As per present scheme service tax is levied on only this service which are listed in service tax law. At present there are as many as 119 service. These services are called taxable service and tax is leviable only on this taxable service and not on any other services. Thus all other services are exempted.

Under proposed scheme all services are taxable and only those services that are mentioned under negative list are exempted. Thus the new scheme is also known as negative list approach, or comprehensive approach  as against present selective approach.

The new scheme shall come in force from the date as notified by the Government after the passing of Finance Bill into Finance Act. Till that time the present scheme shall continue.
Negative List approach to taxation of services will be implemented by introduced vide new sections, namely, 65B Interpretations.
66B Charge of service tax on and after Finance Act, 2012, 
66C Determination of place of provision of service, 
66D Negative list of services, 
66F Principles of interpretation of specified descriptions of services or bundled services.
These new section are proposed in Chapter V of the Finance Act, 1994 . The services specified in the ‘Negative List’ (section 66D) will remain outside the tax net. All other services, except those specifically exempted by the exercise of powers under section 93(1)of the Finance Act, 1994 (Notification No.12/2012-Service Tax)  will thus be chargeable to service tax. Section 65, 66, 66A, 67 will be deleted from the notified date.

Section 66D
66D. The negative list shall comprise of the following services, namely:––
(a) services by Government or a local authority excluding the following services to the extent they are not covered elsewhere—
(i) services by the Department of Posts by way of speed post, express parcel post, life insurance and agency services provided to a person other than Government;
(ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport;
(iii) transport of goods or passengers; or
(iv) support services, other than services covered under clauses (i) to (iii) above, provided to business entities;
(b) services by the Reserve Bank of India;
(c) services by a foreign diplomatic mission located in India;
(d) services relating to agriculture by way of—
(i) agricultural operations directly related to production of any agricultural produce including cultivation, harvesting, threshing, plant protection or seed testing;
(ii) supply of farm labour;
(iii) processes carried out at an agricultural farm including tending, pruning, cutting, harvesting, drying, cleaning, trimming, sun drying, fumigating, curing, sorting, grading, cooling or bulk packaging and such like operations which do not alter the essential characteristics of agricultural produce but make it only marketable for the primary market;
(iv) renting or leasing of agro machinery or vacant land with or without a structure incidental to its use;
(v) loading, unloading, packing, storage or warehousing of agricultural produce;
(vi) agricultural extension services;
(vii) services by any Agricultural Produce Marketing Committee or Board or services provided by a commission agent for sale or purchase of agricultural produce;
(e) trading of goods;
(f) any process amounting to manufacture or production of goods;
(g) selling of space or time slots for advertisements other than advertisements broadcast by radio or television;
(h) service by way of access to a road or a bridge on payment of toll charges;
(i) betting, gambling or lottery;
(j) admission to entertainment events or access to amusement facilities;
(k) transmission or distribution of electricity by an electricity transmission or distribution utility;
(l) services by way of—
(i) pre-school education and education up to higher secondary school or equivalent;
(ii) education as a part of a curriculum for obtaining a qualification recognised by any law for the time being in force;
(iii) education as a part of an approved vocational education course;
(m) services by way of renting of residential dwelling for use as residence;
(n) services by way of—
(i) extending deposits, loans or advances in so far as the consideration is represented by way of interest or discount;
(ii) inter se sale or purchase of foreign currency amongst banks or authorised dealers of foreign exchange or amongst banks and such dealers;
(o) service of transportation of passengers, with or without accompanied belongings, by—
(i) a stage carriage;
(ii) railways in a class other than—
     (A) first class; or
     (B) an airconditioned coach;
(iii) metro, monorail or tramway;
(iv) inland waterways;
(v) public transport, other than predominantly for tourism purpose, in a vessel of less than fifteen tonne net; and
(vi) metered cabs, radio taxis or auto rickshaws;
(p) services by way of transportation of goods—
(i) by road except the services of—
     (A) a goods transportation agency; or
     (B) a courier agency;
(ii) by an aircraft or a vessel from a place outside India to the first customs station of landing in India; or
(iii) by inland waterways;
(q) funeral, burial, crematorium or mortuary services including transportation of the deceased.